Profit-taking slashes stock gains
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By Hope Yen
Associated Press
NEW YORK — Stocks jumped as U.S.-led troops swept into Baghdad and seized a presidential palace today, giving investors hope for a swift end to the war. But a burst of late-day profit-taking left stocks just modestly higher.
Analysts said the developments prompted some investors to bet that a victory would come in a matter of weeks rather than months. Better-than-expected profits from Alcoa also provided a boost, lifting the Dow Jones industrials as much as 243 points before they lost momentum.
"The thought is the situation in Iraq is moving at a rapid pace now," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "As the headlines read over the weekend, it looks like the outcome is inevitable."
The Dow closed up 23.26, or 0.3 percent, at 8,300.41, having gained 1.6 percent in the previous week.
The broader market also finished higher. The Nasdaq composite index rose 6.00, or 0.4 percent, to 1,389.51, following a weekly advance of 1 percent. The Standard & Poor's 500 index gained 1.08, or 0.1 percent to 879.93, after rising 1.8 percent last week.
Today, U.S.-led forces stormed into Baghdad, taking control of Saddam Hussein's New Presidential Palace. British officials also said Ali Hassan al-Majid, referred to as "Chemical Ali" for ordering a poison gas attack that wiped out thousands of Kurds, was killed in a weekend air strike.
Stocks have fluctuated in recent days as investors focus on the latest developments from Iraq and make bets on how long the war will last.
Analysts say traders are generally optimistic about a short war, although they have been quick to sell on signs of a protracted conflict.
Indeed, most shares hit their peak in the first hour of trading before gradually losing much of their gains as investors cashed in quick profits.
"We had a gut reaction move up on strong overseas market gains and the good weekend news," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray. "When investors ran them up over a couple hundred points, many decided it was probably too much, too soon."
